So buy the best condition you can find and try to keep the 10k in reserves.I will warn you against partnering.

Keep in mind studies have been made to where rent control actually lowers vacancies and increases rents.

My question is, do I just not touch the first property, use the cash flow to reinvest and pay down the mortgage or save up for a downpayment down the road OR do I pull cash out of the first property to buy the next property?

@Austin Williams yes you can do a 100% cash out refi on your existing home with a VA loan, but keep in mind that you would need to finance it as a primary residence, which resets the 1 year clock that you need to occupy the property.

Should I keep my listing on there? 

Also perhaps the homes built in the last 10 years have sprinkler systems and even drip systems near the foundation to keep the soil moist.Look for signs when you are viewing homes....especially in the hot areas.When we evaluate homes, especially with buyers we're looking at the BIG 5 as best we can. 

You do have to keep an eye on your write offs to ensure you are showing a good NOI and not using too many write offs to show enough income to use for bank/lender underwriting on a mortgage/loan.

Keep being consistent and it will come.

. - When we've review these options with clients the ending outcome is typically that it's easier to forgo the 121 exclusion if you want to keep this property; and do a cash-out refinance (taking on more debt isn't taxable) instead. 

Then can decide for whatever reason not to fund the loan and keep that engagement fee.